Insurer eyes £1bn-plus flotation

MoneyInsurer esure is to seek a valuation of more than £1 billion under newly disclosed pricing plans for its forthcoming stock market flotation.

The owner of Sheilas' Wheels and half of comparison website Go Compare expects shares to be priced at between 240p and 310p, giving it a mid-point valuation of £1.15 billion and enough for a place in the FTSE 250 Index.

Chairman Peter Wood, who founded Direct Line in 1985 and set up esure in 2000, owns 90% with private equity backer Tosca Penta. Mr Wood will sell shares in the float later this month but will remain esure's largest shareholder.

Management are currently involved in drumming up interest among investors for what will be the London market's biggest flotation of the year to date. Mr Wood said: "We have worked hard for many years to make esure a business that can compete at the highest level with confidence."

It is expected that Mr Wood will pick up in excess of £175 million from the sale of part of his holding. The float, which will place between 35% and 50% of shares in public hands, will raise £50 million towards paying down debt.

Confidence in the initial public offering market has been lifted by the successful listing of housebuilder Crest Nicholson, which was priced at 220p or £550 million on February 13 and is now trading at 280p.

The esure business, which was made famous by the late Michael Winner's "Calm down, dear" television ads, was created out of a joint venture with the Halifax before Lloyds Banking Group sold its 70% stake in 2010.

There were 1.25 million in-force motor policies and 500,000 home policies at the end of 2012, helping the Surrey-based company to more than double pre-tax profits to £115.5 million last year.

The company's conservative approach to underwriting means 87% of its motor policy holders are over 30 years of age, while 98% of in-force home policies are located in areas considered to have low risk of flooding.

And as 95% of Sheilas' Wheels policyholders are female, this has minimised the price disruption caused by the recent introduction of a new gender-neutral pricing regime across the industry.
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